Missouri Industry Clusters:
Information Technology

Technical Paper
ICA-0601-1
by
David J. Peters

KEY FINDINGS

Given that information technology (IT) is a targeted industry
in Missouri, there is a need to delineate the entire IT
value-chain within the state. One method to accomplish this is to
determine and analyze where IT input and output clusters are
located in Missouri. This information is significant in that
decision-makers need to know where potential IT suppliers and
consumers are located within the state. This allows businesses to
better select facility locations, in that it identifies areas
where IT suppliers and consumers are located. Also, it allows
government officials to develop a strategy for recruiting IT
firms, highlighting the state's existing supplier and consumer
base. In general, the most optimal areas for the development of
the IT industry are characterized by a sizable industry cluster
employment base and high specialization.

In terms of backward-linkages, it appears that the IT industry
purchases most of its inputs from the computer and data processing
sector - indicating that the IT sector is highly dependent on
other IT firms to provide needed inputs. In 2000, First-Order
Input cluster jobs were located in metropolitan St. Louis,
Kansas City, Columbia-Jefferson City, and springfield.
Additionally, jobs are also located in several rural areas of the
state, including Barry County, Polk County and Wayne County.
According to specialization ratios, 5 Missouri counties were
highly specialized in First-Order Input cluster employment. These
areas were located in suburban metropolitan areas and in several
rural areas of the state. The most specialized counties in the
state were Barry, Clay, St. Louis, Polk and Wayne.

The IT industry also purchases moderately from the wholesale
trade and electronic components sectors to obtain various goods
used in production; the communications sector to obtain
telecommunications and internet services; and the real estate
sector for facilities. In 2000, Second-Order Input cluster
jobs were located in metropolitan St. Louis, Kansas City and
springfield. Additionally, jobs are also located in several rural
areas of the state, including Cape Girardeau County, Cole County
and Taney County. According to specialization ratios, 2 Missouri
counties were highly specialized in Second-Order Input cluster
employment. These areas were located in two rural areas of the
state. The most specialized counties in the state were Dent and
Putnam.

Lastly, the IT industry purchases sparingly from a host of
business operation services in support of personnel, fiscal, legal
and shipping operations. In 2000, Third-Order Input cluster
jobs were located in metropolitan St. Louis, Kansas City,
springfield and Columbia. Additionally, jobs are also located in
several rural areas of the state, including Cole County, Cape
Girardeau County and St. Francois County. According to
specialization ratios, 2 Missouri counties were highly specialized
in Third-Order Input cluster employment. These areas were located
in the south central area of the state. The most specialized
counties in the state were Webster and Maries.

In terms of forward-linkages, it appears that the IT industry
sells most of its outputs to the wholesale trade sector, who in
turn sell IT goods to retailers for consumers to purchase. In
2000, First-Order Output cluster jobs were located in
metropolitan St. Louis, Kansas City and springfield. Additionally,
jobs are also located in several rural areas of the state,
including Cape Girardeau County, Cole County and Scott County.
According to specialization ratios, 8 Missouri counties were
highly specialized in First-Order Output cluster employment. These
areas were located Kansas City and in several rural areas of the
state. The most specialized counties in the state were Dent,
Putnam, Clark, Chariton, Clay, Scott, Harrison and Dade.

Additionally, the IT industry also sells heavily to other IT
firms, indicating that there is a high degree of interdependence
among IT firms. In 2000, Second-Order Output cluster jobs
were located in metropolitan St. Louis, Kansas City,
Columbia-Jefferson City, and springfield. Additionally, jobs are
also located in several rural areas of the state, including Barry
County, Polk County and Wayne County. According to specialization
ratios, 5 Missouri counties were highly specialized in
Second-Order Output cluster employment. These areas were located
in the suburban metropolitan areas and in several rural areas of
the state. The most specialized counties in the state were Barry,
Clay, St. Louis, Polk and Wayne.

The IT industry also sells moderately to banks, the medical
profession, and the telecommunications sector. Generally, the IT
industry provides mission-critical services and software to these
sectors that is specific to their business functions. In 2000, Third-Order
Output cluster jobs were located in metropolitan St. Louis,
Kansas City, springfield and Columbia. Additionally, jobs are also
located in several rural areas of the state, including Cape
Girardeau County, Cole County and Butler County. According to
specialization ratios, no Missouri counties were highly
specialized in Third-Order Output cluster employment. However,
Maries County and Jackson County had significant above average
specialization.

Lastly, the IT industry sells sparingly to a host of
professional service, transportation and manufacturing firms. The
IT industry provides services and software to college and
universities, hospitals, engineering and architectural firms,
aircraft manufacturing and transportation firms, a variety of
business and consulting services firms, and to the trucking and
warehousing industry. Generally, these industries require a higher
degree of IT infrastructure in order to operate.